Chinese games market report

SAN JOSE, CA - May 2, 2008 - Niko Partners, the leading market intelligence firm on China's video game industry, today announced results from its latest report citing China's 46 million gamers spent $1.7 billion on online games in 2007, up 71% from 2006. Advanced casual and casual online games made up 21% of the total, and new flash-based casual versions of popular MMO and RTS games demonstrated the hardcore gamers' appetite to play casual games along with subscription MMOs. Online revenue is expected to reach $2.5 billion in 2008 and $6 billion in 2012, for a 29% compound annual growth rate in the five-year period.

"China's spending on games is up thanks to their booming economy," said Lisa Cosmas Hanson, managing partner of Niko Partners. "14 million hardcore Chinese gamers play online games more than 22 hours per week. They play online, LAN, and single-player offline PC games in China's 185,000 Internet cafés and increasingly on their PCs at home, thanks to falling prices and higher disposable income."

According to Niko's 6th Annual Review & Forecast Report, part of an annual subscription of reports for publishers, hardware makers, service providers, and investors who need to understand China's fast-moving video game industry, gamers are buying consoles with their disposable income as well. "In spite of the regulation that has banned the sale of game consoles in China since the year 2000, gamers are flocking to stores that sell illegally imported Wii, Xbox 360, PS3 and PS2 machines to take part in the excitement of console gaming," said Hanson. "While these consoles are expensive for the average Chinese consumer, gamers are willing to spend money on them to supplement their online gaming experience, and unit sales hit 2.48 million units in 2007, up 75% over 2006."

Piracy remains an issue for packaged software via digital downloads and counterfeit copies of games, but legitimate sales of packaged offline PC games surged 56% in 2007, over 2006. Chinese gamers are showing that they like to buy the legitimate copies to ensure quality and to get customer support.

The 2008 Annual Review & Forecast Report on China's Video Game Industry by Niko Partners is a thorough review and forecast of the 2007-2012 PC online, PC offline, console, handheld games and hardware market. Based on 75,000 points of data collected by Niko Partners in 10 Chinese cities in March 2008, the study provides one of the largest and most comprehensive sources of information on gamers, Internet cafés, regulations, online game operators, games, hardware, distribution, retail, outsourced development, and important trends in supply and demand.

ABOUT NIKO PARTNERS

Since 2003, Niko Partners has specialized in market intelligence for China's video game industry. We conduct syndicated and custom research studies on Chinese gamers, online games, offline games, consoles, handhelds, regulatory issues, piracy, development, online operators, distribution, and retail. We offer consulting services including focus groups, partnership selection, market opportunity analysis, custom surveys in cities throughout China and customized data analysis. The goal of the research and strategic advisory services is to help video game industry clients understand the market, strategically enter or expand market share, and continue to profitably grow within China. The company is based in Silicon Valley and Shanghai and its clients include worldwide leaders in the video game industry such as Blizzard Entertainment, Electronic Arts, Microsoft, Nintendo, Nvidia, Disney Interactive Entertainment, Macrovision, Tetris, Sony Online Entertainment, LucasArts, Xfire, as well as many other corporations, investment companies, and consulting firms.

For information on the study, please contact:

Lisa Cosmas Hanson

Managing Partner

Niko Partners

http://www.nikopartners.com

408-354-0888

lisa@nikopartners.com

or

Sean Kauppinen

Vice President

TriplePoint on behalf of Niko Partners

415-955-8500

sean@triplepointpr.com